The ZEW Indicator of Economic Sentiment for Germany rose unexpectedly in July, the second straight month it surprised economists with a rise. The indicator rose to +48.4 points, the ZEW Institute said Tuesday, compared with +47.4 points in June.

"This is good news, but financial analysts still seem to be waiting for notable domestic stimulus to spur the economic recovery which has been export-driven thus far," said ZEW President Wolfgang Franz.

The market is anticipating bond market-friendly comments from Federal Reserve chief Alan Greenspan when he talks Tuesday and Wednesday on Capitol Hill. See Greenspan preview.

Converium weighs on reinsurers

Insurers were weaker in Europe as reinsurer Converium
CHR, +0.61%
(001299771) plunged 46 percent after it warned second quarter results will miss expectations due to higher U.S. casualty loss emergence, relating to underwriting years 1997 to 2001. Reserves will be bolstered by up to $400 million. See story on Converium.

Infineon's loss was 56 million euros as it increased a charge it's taking against profits related to U.S. and European antitrust investigations into the DRAM industry, as well as potential civil claims, by 184 million euros to 212 million euros. Infineon said it's been approached by "certain of its major customers seeking compensation for damages arising out of Infineon's alleged anticompetitive behavior." See Infineon story.

But Infineon also reported that revenue rose 14 percent sequentially to 1.9 billion euros and surged 30 percent on the year.

The European chipmakers advanced after a sluggish start, following their U.S. counterparts higher. See Silicon story.

Novartis boosts drug stocks

Drugmaker Novartis
NVS, +3.18%
jumped 4.6 percent after topping estimates with a 18 percent rise in second quarter net income to $1.54 billion, on a 12 percent rise in sales to $6.9 billion, due to improving hypertension drug sales. Novartis predicted "markedly higher" operating and net profits for 2004 on high single-digit sales in local currencies. See Novartis story.

The Novartis news helped the drug sector, lifting GlaxoSmithKline and AstraZeneca in particular in London. See London markets.

Other drug stocks risers included Roche, the Swiss group partly owned by Novartis, which rose 3.2 percent, and Sanofi-Synthelabo (012057)
SNY, +1.58%
which gained 1.9 percent.

EADS (005730), the 80 percent owner of Airbus, improved 1.5 percent after United Arab Emirates airline Etihad said it would buy 24 Airbus aircraft, including four A380 superjumbos.

Automaker Fiat (197640)
FIA
tumbled 3 percent in Milan. Italy's La Repubblica newspaper said Fiat no longer expects to breakeven on an operating level this year and will need to fund a relaunch, a story the company dismissed in a statement.

"No capital increase is scheduled to be carried out in order to provide financial support to the company's development plans," the company said, adding that it will wait until its investor update next Monday to provide further details on its performance and business outlook.

France Telecom (013330)
FTE, -2.32%
rose 0.3 percent after the European Commission said it had to re-pay up to $1.35 billion for tax breaks the French government gave them. But the EC backed off charging the telecom operator for other forms of French government aid it received. See story on France Telecom.

PPR, Christian Dior see rising Q2 luxury sales

Pinault-Printemps-Redoute (012148), the French retailer that owns Gucci, rose 0.7 percent after it said second quarter sales in its retail and luxury goods units rose 5.1 percent to 3.9 billion euros, or 6.7 percent on a comparable basis.

In luxury goods, where comparable sales grew 10.5 percent, Gucci sales rose 11.9 percent, Yves St. Laurent climbed 18.5 percent and Bottega Veneta jumped 59.3 percent, while in retail, which rose 6 percent on a comparable basis, home and leisure sales grew 8.7 percent and apparel and lifestyle added 1.5 percent. PPR's total sales, which include electrical parts group Rexel and disposals it made, fell 6 percent, and was at the top end of analyst forecasts according to an AFX News poll.

Christian Dior Coture (013040), the French luxury retailer that owns nearly half of LVMH Moet Hennessy (012101), rose 1.3 percent after it said second quarter sales rose 26 percent to 138 million euros, or 28 percent at constant rates, leading to first half operating profits of over 30 percent. Asian and U.S. sales led the growth, but European sales also increased, it said. It said the success of its womenswear collections by John Galliano and the Dior Homme line by Hedi Slimane lifted results.

Neither PPR nor Christian Dior gave outlooks as to 2004 earnings; many analysts had anticipated rising luxury goods sales for the second quarter, but the third and fourth quarters are expected to provide more difficult comparison figures.

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